Wall Street inches closer to pre-covid normal; is it now time to ditch the stay-at-home trade?

30% of the US population has been fully vaccinated, according to the Centers for Disease Control and Prevention.
(Image: REUTERS)

Amid a global lockdown in 2020, Wall Street saw a massive surge in the so-called ‘stay-at-home’ stocks. These included the likes of Zoom Video, Netflix, and other tech stocks that benefitted from people staying confined to their homes. Zoom Video’s share price soared 450% between March and October of last year, while Shopify surged 200% and Netflix gained 50%. However, now after the successful roll-out of vaccines, United States is closer to the old normal. But, would this shift could also force investors to ditch the ‘stay-at-home’ trade?

The United States has seen daily new cases of coronavirus drop from 3 lakh at its peak to below 60,000 now. Recently, US President Joe Biden said that fully vaccinated people could remove masks in public areas that were not crowded. 30% of the US population has been fully vaccinated, according to the Centers for Disease Control and Prevention. 

• Since the middle of February, Zoom Video share price has tanked 28% to now trade at $321 apiece. The 52-week high for the stock was $588 per share. 
• Netflix is down 9% since February 12 this year, to now trade at $509 apiece. The stock hit a high of $586 per share in January.
• Exercise equipment company Peloton Interactive has fallen 36% since the middle of February to now trade at $98.9 per share. 
• Digital media manufacturer, Roku has fallen 24% from its February highs and now sits at $356 per share. The stock had hit a 52-week high in February this year.
• Shopify stock price is down 16% from its mid-February highs. The stock trades at $1,233 apiece now.
• Take-Two Interactive, a video game company has seen its stock price drop 15% since February.
• Activision Blizzard, another video game company is down 12% during the same time period.

Should you exit the stay-at-home trade?

“Definitely time to trim them back (and certainly not add more) but also remember that it’s never good to completely abandon an investment that has been so good to you until that investment really starts to disappoint,” Richard Smith, CEO of The Foundation for the Study of Cycles, a research firm told Financial Express Online.

Smith added that Wall Street investors could now be gearing up to tweak their portfolios. “There will continue to be a rotation out of growth and into value.  There will also be crashes in truly overheated speculations like SPACs, many altcoins and NFTs,” he said. However, taking note of the advancement of technology, Richard Smith added that there are true technology-based revolutions unfolding in things like robotics, biotechnology and blockchain. “These will continue but it will be harder to separate the wheat from the chaff,” he said.